4. Suppose the supply curve of portable radio rentals in Golden Gate Park is given by $ P = 5 + 0.1Q $ and the demand curve is by $ P = 20 - 0.2Q $.a. If each portable radio imposes $3 per day in noise costs on others, by how much will the market equilibrium quantity exceed the socially optimal number of rentals?b. How would the imposition of a $3 per unit tax affect the efficiency in this market?

The supply function for the portable radio rentals is given as The demand for the portable radio…

Answered: 4. Suppose the supply curve of portable…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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e underproduce; social cost □ At a given market price suppose the elasticity of demand is -2.2 and the elasticity of supply is +0.5. Then a tax is imposed on consumers. Which group (consumers or firms) will pay a larger portion of the tax incidence? Explain why. H▾▾ B I Α - X₂ X² Ω· Ξ Question 3 = 66 X I
The screenshot shows a graph market for movies at equilibrium: A) Calculate Consumer, producer, and total surplus. b) Suppose in response to public outcry the government imposed a price ceiling of $8 in this market. Explain the impact on the total surplus and market efficiency.
Which of the following is NOT one of the consequences of a binding Price Ceiling? Select one: a. an illegal black market b. a shortage c. a surplus d. a decrease in the price of the good below its equilibrium price
If the daily demand curve for gasoline is as provided in the graph above, then how much consumer surplus would consumers receive if the market price for gasoline were $3.00 per gallon? What about for a price of $4.00 per gallon? As a reminder, the formula for the area of a triangle is (1)/(2) * base* height◆◆ What does this say about how consumer welfare changes if the supply of gasoline decreases? Price per Gal. of Gasoline ($USD) 5.50- 5.00- 4.50++ 4.00++ 3.50 3.00 2.50 2.00 A 0 I B C 2 Demand Curve for Gasoline D E F G Demand Curve H 40 50 60 70 80 80 90 100 110 Gal. of Gasoline Purchased (Millions)
B. Let’s consider the market for flour in a different town. Assume that it is efficient (i.e. that there are not external costs to producing flour, and no external benefits from consuming it). Price ($/lb) Quantity Supplied (thousands of lbs per day) Quantity Demanded (thousands of lbs per day) 1.5 8 14 2 9 13 2.5 10 12 3 11 11 3.5 12 10 4 13 9 What is the price and quantity of flour sold without government intervention. Graph this equilibrium. XXXX 2. Suppose that, alarmed by the inability of many poorer consumers to buy flour, the government institutes a $2/lb price ceiling. How much flour will suppliers wish to sell, and how much will buyers demand? How much flour will actually be sold? Show this outcome on the same graph you drew for question 1. XXXX 3. Describe, in one sentence each, three problems that this policy might create? Please do not simply copy down phrases from the textbook, but instead describe ways that…
Use the following information to answer Questions 1 - 4: In a competitive market for fresh lemonade, the market demand for 12-ounce servings is QD = 100 – 10P and the market supply is QS = 15P. Calculate the competitive market equilibrium price. Calculate the competitive market equilibrium quantity. Calculate Total Surplus at the competitive market equilibrium. Now suppose that the production of lemonade caused a costly negative externality on innocent bystanders (e.g., squirted acidic lemon juice in their eyes). Given the externality, would the unregulated market price of lemonade from 1 be efficient? If not, is it too high o too low?
Identify at least one positive externality from running a donut shop. Identify at least one negative externality from running a donut shop. Explain how these positive and negative externalities could impact the donut shop’s profits. (Hint: think subsidy for positive externality and tax for negative externality.) Draw two graphs that show the price of donuts before and after the positive and negative externality impacted the price of your donuts.
In Figure 1, suppose the marginal value for gasoline falls by $6 for every quantity demanded for all gas stations in the market. Next, assume that the government enacts a price ceiling of $2. What is the loss in consumer surplus? A) $6B) $2C) $12D) There is no consumer welfare loss because prices are lower.E) There is not enough information to calculate.
True or False? A tax of $1 on buyers always decreases the equilibrium price by $1.
Some economists think that gas taxes in Europe, averaging around $2.50 per gallon, are too high from the perspective of economic efficiency. Suppose that this is true, and that social welfare could be increased with slightly lower gas taxes. Present a welfare analysis graph of the gasoline market in Europe with a gas tax that is too high. Identify five areas in your graph: 1. Consumer surplus 2. Producer surplus 3. Externality damage 4. Tax revenues 5. The potential welfare gain if taxes were lowered to the "correct" level.
Suppose that you pay $4 for a delicious burrito. It was so good that you would have been willing to pay $10 for it. How much is your economic (consumer) surplus from this purchase? Group of answer choices $10 $6 $14 $0 $4
8) Consider a perfectly competitive market with a negative externality. What will happen to the social surplus if the government introduces a lump-sum tax on producers? A) Increase in the short run; increase in the long-run B) Increase in the short run; no change in the long-run C) Increase in the short run; decrease in the long-run D) No change in the short run; increase in the long-run E) No change in the short run; no change in the long-run F) No change in the short run; decrease in the long-run G) Decrease in the short run; increase in the long-run H) Decrease in the short run; no change in the long-run I) Decrease in the short run; decrease in the long-run J) The scenario described in this question is impossible because a perfectly competitive market cannot have a negative externality

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